Archive

September 13, 2024
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HEW: Push and Pray Pricing

  • Resilient US inflation and UK employment releases were also fundamentally inconsistent with dovish calls, but market participants are still pushing pricing for 50bp from the Fed and praying it submits. The ECB cut and remains likely to next go in December.
  • The BoE seems set to skip a cut this month after frontloading its easing beyond the data in August’s finely balanced decision. We maintain our call for a 25bp Fed cut and hope it reminds market bullies not to fight the Fed. Calm down, kids: there is no recession.

By Philip Rush

September 06, 2024
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HEW: Landing 25bp Across the Pond

  • Dovish pricing defies resilience in the data. The US unemployment rate’s drop and wage growth’s rise should help the Fed land on a 25bp cut in September. Other central bank decisions have also reassuringly stopped skewing toward dovish surprises.
  • Next week’s ECB decision is almost a foregone conclusion, with a widely expected 25bp deposit rate cut and more to the refi and lending rates as the corridor narrows. UK GDP and labour market data are the other highlights for us, along with US inflation.

By Philip Rush

August 30, 2024
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HEW: Holiday Market Consolidation

  • It’s been a conveniently quiet week to end the summer holidays with the few notable data releases conforming to expectations. Market pricing has consolidated recent gains, breaking some bullish trends consistent with our pushback to inconsistent pricing.
  • Next week starts with the lull of US Labor Day and ends with the crescendo of payrolls, which could dismiss hopes for a 50bp rate cut. A third consecutive 25bp cut from the Bank of Canada fills the gap, with policy announcements also in Chile and Malaysia.

By Philip Rush

August 23, 2024
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HEW: Pushback to Inconsistent Pricing

  • Resilient activity data are inconsistent with policy rates so tight that deep cuts are needed. Equities enjoy resilience and loosening conditions, but they shouldn’t occur together. Equities and GBP near their peaks create an unattractive asymmetry.
  • Stretched market pricing may dominate moves next week amid a thin data calendar and widespread late summer holidays. Flash EA inflation for August is our main event, but we are close to the consensus in forecasts for a renewed headline slowing.

By Philip Rush

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